Sept. 14 (Bloomberg) -- Fraser & Neave Ltd. rose above Thai
billionaire Charoen Sirivadhanabhakdi’s offer price as investors
speculated that the Singapore-based company may attract a higher
bid and Heineken NV considered its next step in a two-month
battle to gain control of F&N’s beer business.

F&N advanced 4.8 percent to S$8.92 at the close of trading
in Singapore yesterday after a company linked to Charoen’s Thai
Beverage Pcl offered S$8.88 a share for the 70 percent of the
company that he doesn’t control. The bid, which potentially
blocks Heineken from buying Tiger beer maker Asia Pacific
Breweries Ltd., values the company at $10.3 billion. F&N rose in
Singapore trading today.

“There’s a prospect that someone can come in with a better
offer,” Justin Harper, a Singapore-based market strategist at
IG Markets, said in a phone interview. “There’s also the
prospect that if Charoen takes over F&N they will unlock a lot
more value by breaking the company up.”

Charoen, 68, set off a scramble for F&N and its assets when
he agreed to buy a stake in July. Heineken countered with a bid
for F&N’s 40 percent stake in APB, which the Dutch brewer
already partially owns. Charoen hasn’t explained the rationale
behind his offer, which comes ahead of a Sept. 28 meeting where
F&N shareholders will vote on Heineken’s proposal.

“Thai Bev’s plans for FNN if it manages to buy out a
majority stake remains unclear,” Jenai Chua, a Singapore-based
analyst at Bank Julius Baer & Co., which manages $281 billion in
assets, said by e-mail. “We would not rule out the possibility
that it is trying to block the sale of APB to Heineken.”

F&N advanced 0.6 percent to $8.970 at 9:37 a.m. in
Singapore trading, boosting its climb this year to 45 percent.

F&N Counter Offer?

Heineken’s options may include making a counter offer for
F&N, either by itself or with a partner, said Goh Han Peng, an
analyst at DMG & Partners Research Pte in Singapore.

Were Heineken to make such a bid, the main risk would be
finding a buyer for F&N’s property business amid a difficult
economic climate, Melissa Earlam, an analyst at UBS AG, wrote in
a note. Without a partner, “we believe Heineken’s balance sheet
would be too stretched to counter-bid,” she said.

Japan’s Kirin Holdings Co., which also owns a 15 percent
stake in F&N, had considered making a bid for F&N’s food and
soft-drinks unit, several people with knowledge of the matter
said in August. Coca-Cola Co. has explored a bid for the drinks
operations, people with knowledge of the matter have said.

Heineken, which owns 46.3 percent of APB, won’t walk away
from the deal as the Amsterdam-based brewer wouldn’t be able to
realize its ambition of becoming a global brewer, Goh said.

“Giving up is out of the question,” the analyst said.
“If Heineken makes an offer with another party, the possibility
of a break-up is higher.”

Emerging Markets

The Dutch company, the world’s third-largest brewer, has
sought full control over APB to protect its hold over a key
emerging-markets business. Heineken has the smallest presence of
the world’s big three brewers in developing regions such as Asia
and Latin America, according to data compiled by Bloomberg.

Heineken in August raised its offer for APB to S$53 a share
from S$50 and said it won’t increase the bid. The $4.4 billion
offer followed a S$55-a-share bid from a company controlled by
Charoen’s son-in-law for a 7.3 percent stake.

Yesterday’s offer for F&N “makes it even more unclear how
Heineken can ever gain control of the APB asset,” Earlam said.

F&N said in a Sept. 12 presentation to investors that
Heineken’s offer for APB is “higher than the corresponding
multiples for recent precedent transactions.”

Bid Multiple

Investors may balk at any increase in the price to gain
control of APB, Earlam said. The multiple, valuing APB at about
21.5 times earnings before interest, tax, depreciation and
amortization “set a new record in terms of major brewing M&A,”
Earlam said. Anheuser-Busch InBev’s bid for control of Grupo
Modelo SAB was at 17 times, she estimated.

Heineken will review ThaiBev’s statement and comment when
appropriate, spokesman John Clarke said in an e-mail.

Heineken rose 0.2 percent to 43.03 euros at the close of
trading in Amsterdam yesterday. ThaiBev rose as much as 1.5
percent to 34.5 Singapore cents.

The bid battle is likely to be a straight fight between
Heineken and ThaiBev, Julius Baer’s Chua said.

“Given the advanced stage that the bidding war has
progressed to, any interested parties would already have made
their intentions known,” he said.

Purchasing F&N would widen Charoen’s influence in Asia. His
brewer, which is F&N’s largest shareholder with a 29 percent
stake, got almost all its revenue from Thailand in 2011,
according to data compiled by Bloomberg.

While the billionaire’s bid is the largest announced by a
Thai company in at least a decade, according to data compiled by
Bloomberg, he may still need to increase the price.

“The price is not convincing,” Donald Chua, an analyst at
CIMB-GK Pte in Singapore, said in a note, adding that the
potential for higher offers from ThaiBev will act as a catalyst
to F&N shares. “We advocate waiting for further developments.”